Paris Guillemet

Mr. Haun
Per:2
2/6/20

Patent wars: Do they help or hurt the market? How do they affect prices and sales?

Patents and patent enforcement strategies have become an essential part of firms'

competitive strategies: They are used as isolating mechanisms to protect intellectual

property or as defense mechanisms to help obtain access to external innovations. Using

data from the global smartphone market, the authors of this paper investigate the effect

of escalated patent litigations—the so-called patent war—on firm strategy. The

smartphone industry is a classic example of a business ecosystem, as participants in

this industry are highly interconnected and this interconnectivity means that effects on

some ecosystem participants are likely to extend to affect the rest. The authors' findings

show that the efficacy of patent enforcement systems across markets plays a significant

role in firm strategy during patent wars, and ultimately shapes the global competitive

landscape. As the patent war intensifies, smartphone vendors, even those not directly

involved in patent litigations, gradually shift their business focus to markets with weaker

intellectual property (IP) rights protection. This shift, however, is attenuated for vendors

with stronger technological capabilities and is more pronounced for vendors whose

home markets have weak IP systems.